In a speech on 23 September 2020 the EU Executive Vice President and Competition Commissioner, Margrethe Vestager, emphasised the importance of the role of competition policy and the Digital Services Act in the EU’s recovery from COVID-19.
The Commissioner said the EU remained committed, despite the COVID-19 crisis, to its objectives of advancing its work on the digital economy, the so called “Digital Transition”. This had a crucial role to play in the post-COVID-19 recovery. The Commission is continuing its programme of revising regulation and competition for the digital age. Whilst many of the principles behind competition law enforcement will remain the same there are a number of aspects in the digital marketplace which give rise to difficult issues which competition law alone cannot adequately address. That is why the Commission is proposing a Digital Services Act.
The draft Digital Services Act sets out two sets of rules. The first is about fundamentals rules: what rights do digital services operators have when they operate in the Single Market? What are their obligations to consumers and how will those rights and obligations be enforced?
The second area is to ensure digital markets have a level playing field. The Commissioner commented that
“We’ve already seen how large digital players can engage in harmful practices. They can use their strong position in one market to gain an unfair advantage in others – for example Google’s use of its search engine to favour its own shopping service.”
That is why she commented that the Commission was working on is an ‘ex ante regulation’, which essentially consisted of a list of dos and don’ts which would apply to a small set of large gatekeepers, setting out clearly which practices platforms are expected to ‘do’, like making some data accessible to other users of their platform, as well as the ‘don’ts’, like proven harmful forms of self-preferencing.
Sitting alongside the Digital Services Act is the need to strengthen the EU’s enforcement of competition policy. To date most of the Commission’s approach has been focused on investigations on the behaviour of individual companies. However, that has slowly been changing with increased use of sector inquiries under the EU’s competition powers. What the EU is now proposing is a further more radical step which would allow it to review markets which have features that may harm competition and to propose remedies. The Commission is therefore working on a New Competition Tool for investigating markets. This new procedure is likely to be closely based on the Market Investigation powers given to the Competition & Markets Authority under the UK Enterprise Act 2002. This would allow the Commission to review the way certain specified markets were working and implement changes where it found that aspects of a market were not working effectively from a competition point of view. The Commission says it wants to have the powers to introduce appropriate and proportionate remedies to ensure markets remain contestable.
However, this latest policy initiative is bound to be controversial as it advances through the EU legislative process as it gives the Commission considerable powers to impose remedies and possibly order divestitures with little effective legal oversight. EU lawmakers are likely to be concerned about many aspects of the Commission’s proposal, so it remains to be seen whether it ever finds its way on to the statute book.
Commissioner Vestager closed her remarks by reemphasising her commitment to a vigorous competition policy notwithstanding the ex -ante reforms being proposed She stated that the Commission is dedicated to promoting a fast and sustainable recovery from COVID-19, but to get there the full force of competition is needed. That was true in the past and it will be true in the future. Competitive markets drive the economy towards higher growth. They also deliver innovation and push onto the technology frontier. Therefore, the Commission will be pursuing vigorous and sustained enforcement of the competition rules as it has done in the past.
